Economic growth in the EU will have slowed to a near-standstill by the end of the year, the European Commission announced today.

According to revised economic forecasts, growth in the EU’s 27 member states is expected to slow to 0.2% in the third quarter of 2011 and to 0.1% in the fourth quarter.

The Commission said that growth would remain positive for the year as a whole at 1.7% in the EU and 1.6% in the eurozone because of a strong performance in the first quarter.

Olli Rehn, the European commissioner for economic and monetary affairs, said that the EU’s economy had been affected by a “difficult external economic environment while domestic demand remained subdued”. He said that the sovereign-debt crisis had worsened while financial market turmoil would “dampen the real economy”.

The forecasts covered seven of the EU’s largest economies. Of the seven, Poland is expected to show the fastest growth this year with an annual rate of 4%. Italy and Spain are forecast to have lowest growth, at 0.7% and 0.8% respectively. 

Rehn said that putting the European economy back on track required “steadfast continuation” of “differentiated, growth-friendly fiscal consolidation”. Structural reforms were “more important than ever to build tomorrow’s growth potential”, he said.

Inflation is expected to ease in the remaining quarters to reach 2.5% in the EU and 2.9% in the eurozone for the year as a whole.

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